How to buy the ideal investment property

Posted on March 7th, 2019.

Most experienced investors look for distressed property they can purchase below market value in areas which have a high rental yield (calculated as the net rental income divided by the cost of the property).

Investors need to work out the ‘UPWARDS’ in any deal.

U – Is the area on the Up? (There may be Government Incentives, infrastructure improvements, new residential developments and new retailers moving in to the area- job creation)

P – What is the Potential for development of the property?

W – Has the property been Wrongly valued by an estate agent?

A – Buying at Auction can be great fun and bargains can be picked up but make sure you have done your research and have finance in place.

R Reversion. What are the uses for the property and exit strategies?

D – Is the property Distressed?

S – Is the Seller motivated? How can you structure the deal to help them?

By combining one or more strands of the UPWARDS formula you can increase your chance of success. If two, three or even four strands of UPWARDS come together in one property that maximises your profit potential.  Below are the crucial questions:

What increases desirability?

Off street parking? Yes.

Electricity pylon? No.

Loft conversion? Yes.

High crime area? No.

River views?  Yes

Cemetery views ? No

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Is the property near good schools? If you don’t know check the local Ofsted reports.

You need to do the research to find out what is good and bad in the local area. Use the internet to research the history of the property with the estate agent.

There will be a ceiling value on rental properties within a street so find out what it is. Compare the property you are looking to invest in with others on the same street. This can easily be done by checking websites like Zoopla and Rightmove or speaking to agents.

The Yield

 Some of Southgate’s greatest residential buy-to-let yields may come as a surprise.

As property prices in the area are quite high many homes do not currently offer the best yield (the net rental income divided by the value of the property) although you may see the greatest capital growth.

However, it is important to get in depth market intelligence as demand for rents and property can differ from street to street. In many places demand can differ greatly just within a few hundred yards so doing research is the key to investment. 

Is the home near a sought after local school and transport links? You may get the best of two markets; for young families who tend to stay for the long term or graduates who may look to share with others to mitigate the costs.

Who is going to be using the property and where are they travelling to?  Has it got good transport links?  Know your strategy, identify the area and just remember a house or a flat is a box to make you money.  You should treat it like this.

If you’d like to know more about Buy-to-Let and how to maximise the income potential of your investments, whether you are a first-time landlord, experienced investor or working with other agents, give us a call on 0208 366 9777 or email me [email protected]